Market Insight for the Week Ending 28 April

The Week Ahead's Tier-1 Risk Events

The US consumer confidence data on Tuesday, Australian inflation and US durable goods data on Wednesday, the US Q1 GDP and weekly jobless claims on Thursday, the Bank of Japan (BoJ) rate decision and the US Core PCE Price Index on Friday, are all tier-1 risk events to keep an eye on this week.

On Thursday of this week at 1:30 PM GMT+1, the US will be keeping a close eye on the advance Q1 US GDP statistics (2023). Many desks anticipate an annualized growth rate that is a little lower. According to median projections, growth will slow to 2.0% in Q1 from 2.6% in Q4 (2022). However, the predicted range is set at 2.7% to 1.3%. The core personal consumption expenditure deflator will be another another US announcement that will be closely monitored.

Prior to the event, the median consensus prediction predicted 0.3% MoM (consistent with the previous month's release) and 4.5% YoY (0.5 percentage points less than the previous 5.0% print). Note that I do not believe this will be enough to prevent the Fed from raising the Fed Funds rate by another 25 basis points the following week, assuming we print as anticipated. Relevant is the fact that markets presently predict a raise of 25 basis points with a 90% likelihood, raising the Fed Funds Target range to between 5.0% and 5.25%.

Australia's Q1 CPI inflation report for 2023 will be made public on Wednesday at 2:30 AM GMT+1. According to consensus projections, the quarterly inflation rate for 2023 is predicted to drop to 6.8% from 7.8% in Q4 (2022), which was the highest quarterly inflation rate since 1990. The ASX 30-Day Interbank Cash Rate Futures (May 2023) show that markets are pricing in the possibility of keeping the Cash Rate Target unchanged once again on May 2. The Reserve Bank of Australia's (RBA) Official Cash Rate is now 3.6%. Board members stressed that the decision to stop policy tightening was close after reading the minutes from the RBA's last meeting, which gave the AUD some fuel.

This week, the Bank of Japan (BoJ) is also receiving attention. Although there are no plans to change the ultra-loose monetary policy of the central bank, this meeting will be Kazuo Ueda's first as president.

This week, the attention of investors is focused on the earnings of many important US equity sectors. Alphabet Inc. (GOOGL), Microsoft Corp. (MSFT), Meta Platforms (META), and Amazon (AMZN) are the IT companies that announce their Q1 (2023) results after the market close on Tuesday and Thursday, respectively.